Are Job Losses and New Business Creation Negatively Correlated?
Tuesday August 12, 2008
King Banaian (someone I need to link to more often) writes:
I have to wonder if this should instead be because of. My thinking is this - people get fired or laid off from their job, need something to do and a source of income and decide to instead to follow their long-time dream of opening up a sports bar or baseball card store.
I need to go through the literature and see if anyone has ever studied this. I am a little surprised that I have never considered it up to now.
You'd never know it, but... there were 23,000 more firms established in the fourth quarter of 2007 than there were firms that went out of business...(emphasis mine)
This despite a net loss of 107,000 construction jobs and 66,000 manufacturing jobs.
I have to wonder if this should instead be because of. My thinking is this - people get fired or laid off from their job, need something to do and a source of income and decide to instead to follow their long-time dream of opening up a sports bar or baseball card store.
I need to go through the literature and see if anyone has ever studied this. I am a little surprised that I have never considered it up to now.
Comments
Maybe there’s a positive-sloped relation between firm age and number of employees, at least at low ages.
That would yield the result.
That is possible. We discussed it when coming out of the last recession down here, so if you look for things written in 2004 or 2005 you may find what you’re looking for.
Joseph Schumpeter coined the term “creative destruction” to describe capitalisms process of destroying an old structure and creating a newer (debatably better) structure. Check out some work by Schumpeter. I think his term really matches well with this topic. I’m sure he’s done something that pertains to what you’re looking for.